Lister v Towerpoint Office Furniture Pty Ltd
[1996] IRCA 461
•16 September 1996
DECISION NO: 461/96
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1287 of 1996
B E T W E E N:
Greg LISTER
Applicant
A N D
TOWERPOINT OFFICE FURNITURE PTY LTD
Respondent
REASONS FOR DECISION
16 September 1996 PARKINSON JR
This is an application made pursuant to Section 170EA of the Industrial Relations Act, 1988 (“the Act”). The applicant contends that his employment was terminated without valid reason and harshly, unjustly and unreasonably. Since this matter was reserved the High Court has handed down judgment in State of Victoria & Others v The Commonwealth of Australia. (Brennan CJ, Dawson, Toohey, Gaudron, McHugh, and Gummow JJ, unreported 4 September 1996 ) I have taken that Judgment into consideration in deciding this matter.
The respondent contends that the Court lacks jurisdiction to entertain the s170EA application as the applicant was engaged as an independent contractor. Alternatively the respondent contends that the applicant was engaged upon a trial period and as a consequence is precluded by operation of s170CC and Regulation 30B from bringing the proceeding.
The applicant was employed in November 1995 as a business manager and sales representative for the respondent’s office furniture business. He was employed after being approached by the respondent and attending for an interview. His duties were to administer the business of the respondent and to expand and promote that business.
The applicant was engaged pursuant to written terms. Those terms, which I am satisfied were contained in a letter dated 30 October, 1996 (Exhibit A1), made an offer of employment to the applicant, setting out therein a commencing salary per week, a profit based bonus of 25% of monthly profits, together with various other conditions, including a company car and petrol allowance. The profit share arrangement was proposed to be in operation from the date employment commenced. The applicant’s evidence was that he accepted this package, although he concedes that arrangements were made for him to be paid a base salary pursuant to an invoice rendered by him to the respondent on a weekly basis. This arrangement was apparently for taxation purposes, and whilst it is not clear to whose benefit such an arrangement worked, it is clear that no deduction of PAYE taxation contributions were made in respect of the applicant.
The evidence satisfies me that the applicant was an employee of the respondent, despite the sham arrangements implemented by the parties to characterise the payments of wages in a different way. The applicant, although exercising a degree of autonomy in the performance of his duties as a manager, consistent with the level of seniority of the position, was accountable to the respondent’s managing director in respect of his conduct and work performance. He worked in a shop assistant and sales promotions capacity. He worked both in store and canvassing. His duties are the ordinary duties of an employee in a retail or wholesale outlet and he attended work in accordance with the demands of the respondent. There is no evidence of any management agreement or arrangement being entered between the parties. The contractual entitlements of the applicant were as contained in Exhibit A1 and remained as such, except as to wages or salary payments, until the termination of the employment on or about 17 January, 1996. As to the contractual matters it ought be noted that I am satisfied that the applicant had contractual entitlements to use the petrol account at the service station where the respondent held an account. He had further entitlement to use of the company motor vehicle and the respondent’s mobile phone. The attempt by the respondent to reflect upon the applicant’s character or credit by alleging unlawful use of these items and accounts, reflects poorly upon the respondent.
The alteration to the arrangements which occurred on 17 January, 1996 by way of a signed agreement (Exhibit A3) and describing the applicant as a “free agent”, in my view had no other legal effect than to alter the terms of the cash remuneration arrangements between the parties, at least pursuant to the employment agreement. The applicant became entitled to payment as a commission of sales achieved. The agreement did nothing to alter the status of the applicant as an employee and whilst it may have been the respondent’s intention to achieve this end by the language used in the letter, this intention was not reciprocated by the applicant and not effected by the document. I am satisfied that the applicant was not an independent contractor to the respondent and was an employee of the respondent. I turn now to consider matters arising pursuant to s170CC and Regulation 30B of the Act.
The terms of the agreement for employment were contained in a letter of offer of employment to the applicant from the respondent dated 30 October, 1995 (Exhibit A1). They provided for salary and motor vehicle provision together with petrol allowance and a sales commission. Whilst the terms of the letter of offer, Exhibit A1, provide for a reduced salary in the first month of employment, the terms did not state that there was any probationary or trainee period applicable during that time. That a probationary or trainee term was established in advance of the employment is not a conclusion available from either the documents or the oral evidence in this proceeding. I am satisfied that the applicant was not employed upon a training or probationary period in the first month of his employment and therefore is not precluded by operation of s170CC or Regulation 30B from bringing this proceeding. Nor is there any other documentary evidence before the Court as to any trial period of employment. I am satisfied that there was no probationary or other trial period of the type contemplated by Regulation 30B applicable to the employment of the applicant by the respondent. The applicant is not precluded by operation of that Regulation from bringing these proceedings. I now turn to the substantive matters in the application.
Section 170DE(1) - Valid Reason
The respondent had raised a number of concerns with the applicant as to his work performance. These concerns included that the applicant was raising the expenditure of the business beyond levels acceptable to the managing director, Mr Bric and beyond levels which the latter believed were able to be absorbed by the business. These concerns had been raised with the applicant orally and in writing over a period of time between November, 1995 and the date of the applicant’s employment ceasing on about 17 January, 1996. In particular a letter of 9 December, 1995 raised specific concerns in relation to advertising expenditure and lack of business plan and development. This letter was the letter which led to the purported termination of the applicants employment on 9 December, with a resulting subsequent purported rehiring of him as a “free agent” on 17 January, 1996. I have already dealt with the consequences of these matters as to jurisdiction. However I am satisfied that the various dealings between the parties in this regard evidence that the respondent raised with the applicant its concerns as to his work performance in the course of the employment. Further I am satisfied that the evidence establishes that there was an incompatibility between the business methods of Mr Bric and the methods
utilised by Mr Lister. This incompatibility principally arose from the level of expenditure issue discussed earlier. It is also apparent that the applicant in the performance of his duties was unwilling to compromise his management style and methods to conform with the requirements of the respondent’s managing director. As a result of these matters Mr Bric decided that the employment ought be terminated.
The recent High Court decision in The State of Victoria and others v The Commonwealth of Australia (Brennan CJ, Dawson , Toohey, Gaudron, McHugh, and Gummow JJ, unreported 4 September 1996 ) precludes any consideration of the matters which were contained in s170DE(2) concerning the question of whether the termination of employment was harsh, unjust or unreasonable. The Court is thus confined to a consideration of the operation of s170DE(1). In approaching this matter I have had regard to the decision of Northrop J in Selvachandran v Peteron Platics Pty Ltd (1995) 62 IR 371 in considering the operation of s170DE(1) as to valid reason his honour stated at 373;
“In its context in subsection 170DE(1), the adjective "valid" should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of subsection 170DE(1). At the same time the reason must be valid in the context of the employee's capacity or conduct or based upon the operational requirements of the employer's business. ”
His Honour’s Judgment has assisted me in my consideration of the issues arising in this proceeding. For a reason to be valid it is necessary that the reason be sound and not capricious. In my view this requires that the respondent establish sound and defensible reasons for the decision taken to terminate the employment relating to the operational requirements of the business or the conduct or work performance of the applicant. In this proceeding I am satisfied on the evidence and in particular my observations of the applicant in the course of his evidence, that the applicant’s business style did not suit the respondent and the applicant failed to take heed or to compromise his approach, despite being on notice by the respondent that there was dissatisfaction as to his work performance. I have concluded in this way having observed the applicant and his demeanour in the proceedings, together with his responses to questions as to his preparedness to take congniscance of the concerns of the respondent. It is clear to the Court that the applicant is not a person who compromises his methods of approach. He conceded as much in the course of his evidence. Further his evidence acknowledged the parlous state of the business, and the fact that there was an incompatibility between the operational methods of the managing director and the applicant.
In so finding the Court is making no finding as to the appropriateness of either method to the efficient or proper running of the business. The evidence of the respondent was that the business was an unprofitable and financially unstable enterprise and this was accepted by the applicant as being accurate. The respondent sought to place blame for this fact upon the applicant. The evidence establishes that this was the situation before the applicant commenced employment with the respondent although not improved afterwards.
The respondent has established on balance that there were real and ongoing operational concerns as to the viability of the business in circumstances where expenses were not significantly reduced by the applicant. It has on balance also established that the applicant approached the task for which he was employed in a manner inconsistent with the business approach of the respondent and that he persisted in doing so after he had been advised by the respondent as to its concerns about the applicant’s approach and expectations as to the ongoing conduct of the business. I am satisfied that the conduct of the applicant was sufficiently serious enough to find a valid reason for the termination of the applicant’s employment based upon the operational requirements of the business and the applicants work performance. I am not satisfied that there has been a contravention of s170DE(1) of the Act and I now turn to consider the operation of s170DC.
I am satisfied that the respondent raised the matters of concern with the applicant and that this occurred frequently during the course of the rather short period of employment and at a time close in proximity to the termination of the employment. I am satisfied that the applicant had adequate opportunity to respond to the concerns and to be responsive in this regard. I am satisfied that there has been no contravention of s170DC of the Act.
Section 170DB - Minimum Notice Requirements
The applicant is pursuant to s170DB of the Act entitled to a minimum notice period of one week. I am satisfied that the applicant continued to be entitled to a base salary of $ 900.00 per week in addition to a sales commission as negotiated by the 17 January variation. (Exhibit A3) The applicant was entitled to a minimum of one weeks notice having been employed by the respondent for a period of less than 12 months. That is the sum of $ 900.00 and that is the amount that the respondent will be ordered to pay in damages to the applicant pursuant to s170EE(5) of the Act.
I certify that this and the preceding six (6) pages
are a true copy of the reasons for decision of
Judicial Registrar Parkinson.
Associate : Paul Ferguson
Dated : 16 September 1996
APPEARANCES
Counsel appearing for the applicant : Mr. R. Niall
Solicitors for the applicant : Ryan Carlisle Thomas
Counsel appearing for the respondent : Mr. P. Kouris
Solicitors for the respondent : De Graaf & Birkett
Date of hearing : 23 August 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1287 of 1996
B E T W E E N:
Greg LISTER
Applicant
A N D
TOWERPOINT OFFICE FURNITURE PTY LTD
Respondent
MINUTES OF ORDERS
16 September 1996 PARKINSON JR
THE COURT ORDERS THAT:
That the respondent pay to the applicant damages in the sum of $900.00 pursuant to Section 170EE(5) of the Industrial Relations Act, 1988.
In all other respects the application pursuant to Section 170EA is dismissed.
That time for payment be 21 days from the date of this Order.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
CATCHWORDS
INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION -
JURISDICTION - whether applicant engaged as independent contractor - whether applicant engaged under PROBATIONARY PERIOD - whether conduct of employee VALID REASON for termination -
Industrial Relations Act 1988, ss 170CC, 170DC,170DE(1) 170EA, 170EE(5)
Industrial Relations Regulations Regulation 30B
State of Victoria & Others v The Commonwealth of Australia. -
unreported, High Court - Brennan CJ, Dawson , Toohey, Gaudron, McHugh, and Gummow JJ. 4 September 1996, M46 of 1994.
Selvachandran v Peteron Plastics Pty Ltd - Northrop J(1995) 62 IR 371
LISTER v TOWER POINT OFFICE FURNITURE
VI 1287 of 1996
Before: PARKINSON JR
Place: MELBOURNE
Date: 16 September 1996
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